Looking for the best renters insurance? Fortunately, renters insurance is an incredibly cheap policy to buy and there are several insurers that industry surveys show do a good job pleasing customers.
In this article, we’ll explain what a renters insurance policy covers and who needs it. We’ll also cover which companies get high marks and how to identify the best renters insurance companies on your own.
Understanding renters insurance
When you’re a renter, there’s a misconception that your landlord’s home insurance policy also covers your personal property. Unfortunately, that’s usually not the case.
“In general, landlords are not responsible for your belongings,” money expert Clark Howard says. “The sole exception is in the case of ‘negligence’ on the part of the landlord, which is very hard to prove in a court of law. So you’re on the hook if your belongings are stolen, damaged or destroyed in a fire. That’s where renters insurance comes in.”
Table of contents
- What is renters insurance?
- How much does renters insurance cost?
- Who needs renters insurance?
- Best renters insurance companies
1. What is renters insurance?
Renters insurance is an insurance policy offered by both mainstream insurance companies and newer fintech players to people who don’t own their home. The policy protects you and your belongings against perils such as:
- Water damage
What does a renters insurance policy consist of?
A typical renters insurance policy has several main categories of coverage. These include:
- Personal property
- Temporary living expenses
- Personal liability
- Medical bills
Personal property coverage
Like its name suggests, personal property coverage provides protection for what you own: Furniture, clothing, electronics, etc.
However, it usually excludes valuables like fine art and jewelry. For those items, you’ll need to purchase an additional rider. Ditto for portable electronics that are valued at more than $1,500.
“Be certain that your policy includes replacement value coverage. That will help avoid protracted battles over the price of depreciating assets like old electronics,” Clark says. “You’ll just get one lump payout to replace your items rather than having to haggle over the depreciated value of a three-year-old TV.”
Temporary living expenses
Also called relocation assistance or loss of use coverage, this part of your policy pays to put you up in a hotel if your apartment become uninhabitable because of something like a fire or water damage.
Personal liability coverage protects you if someone is injured on your property and decides to sue you.
This coverage includes a certain dollar amount that your insurer will pay toward legal fees, medical bills or damages in the case of a lawsuit.
Your landlord may have a specific amount of personal liability coverage they require you to carry.
While personal liability coverage shields you if someone is hurt on your property, the medical payments part of your renters insurance policy will pick up small medical bills for whoever is hurt.
2. How much does renters insurance cost?
The National Association of Insurance Commissioners says you should expect to pay somewhere between $15 and $30 a month based on where you live, how large of an apartment you rent and how valuable your possessions are.
To put that to the test, we pulled online quotes for renters insurance policies from three competitors — two traditional insurance companies (Allstate, Farmers) and one fintech startup (Lemonade).
All quotes below are based on $20,000 worth of personal property coverage, $100,000 in personal liability, $1,000 in medical payments and between $4,000 to $6,000 in loss of use on a townhome rental in metro Atlanta.
3. Who needs renters insurance?
Renters insurance is required by most large property managers who have multiple complexes. If you’re renting from a private landlord, a policy may not be required — but it’s still a good idea to have one.
There’s one other unique category of renter who needs insurance: College students who live in off-campus housing.
Most college kids living in a dorm or nearby campus housing will be covered at around 10% of a parent’s home insurance policy. So if the parent has personal property coverage of $100,000, the student will get coverage of $10,000 for their belongings in a dorm. But that’s not the case if the student lives off-campus. So these students need a policy of their own.
Meanwhile, if you’re living with roommates, it’s important to know that renters insurance does not cover roommates unless they’re specifically named on the policy. However, adding a roommate to your policy is not advisable; they need to get their own policy.
If they don’t have their own policy and they’re named on yours, any claims that roommate makes on the policy will go on your Comprehensive Loss Underwriting Exchange (C.L.U.E.) report, not theirs.
Insurers use the C.L.U.E. report to get a read on an individual’s risk and to price insurance policies of all kinds accordingly. The more negative info on it, the higher your rates will be in other areas of your insurance life.
4. Best renters insurance companies
Each year, Clark watches J.D. Power’s annual home insurance tally closely. This survey of more than 140,000 people helps him understand who’s doing a good job service policy holders with the best renters insurance coverage.
From June-July 2018, J.D. Power asked renters to rate their insurers on six criteria:
- Overall satisfaction
- Policy offerings
- Billing process and policy information
The very top performer was USAA, which received the highest possible marks on all six measures and scored 885 on a 1,000-point scale. But since USAA is only available to military personnel and their families, it’s not included in the formal rankings.
Therefore, the top performers are as follows:
J.D. Power best renters insurance companies
|Carrier||Score on a 1,000-point scale|
The industry average on the J.D. Power scale is 839. Only one other insurer, State Farm, beat that average with an 840 score.
Meanwhile, all the other insurers on the tally performed below the industry average for the renters insurance customer experience:
- Allstate – 832
- The Hartford – 831
- American Family – 829
- Farmers – 825
- Travelers – 820
- CSAA Insurance Group – 819
- Nationwide – 816
- Liberty Mutual – 811
- MetLife – 800
- Safeco – 800
“It’s common that renters don’t want to shell out for it because they think their belongings aren’t that valuable,” Clark says. “But if your belongings are stolen, damaged or destroyed, do you have enough money to cover that expense of replacement? Many people don’t. That’s why this kind of insurance is advisable.”
When you’re looking for the best renters insurance policy, there’s a simple two-step process you should follow:
- Determine your coverage limits
- Shop around for a minimum of three quotes
The first step is to figure out how much coverage you’ll need. Many companies have online calculators to help you determine the amount of coverage that makes sense for you. Allstate’s What’s Your Stuff Worth? tool is one of the more robust ones.
The second step is to shop around. One of the recommended three quotes you get should be from the same insurance carrier that writes your auto insurance policy. Here’s our list of the best auto insurance carriers.
As a general rule, it’s smarter to get coverage on your own rather than through your apartment complex. Renters insurance is a real profit center for them and you’ll generally find better quotes when you shop away from their preferred providers.
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